Posted on 08/08/2010 4:58:30 PM PDT by RummyChick
My question is if so, is the Corp Bond Market in essence locked up and was that intentional. Ford found work arounds, but this is serious as a heart attack.
Mortgage-backed Securities
http://useconomy.about.com/od/glossary/g/mortgage_securi.htm
Definition: Mortgage-backed securities are a bundle of mortgages that have been sold by banks to Fannie Mae, who then repackages them and sells them to individual investors.
This allows the banks and mortgage companies to sell mortgages off, and take them off their balance sheets. This removes one constraint on banks to make sure the loans are to qualified borrowers.
Another nail in the RATs box for November. Their box should be sealed by now.
When the various economic numbers are reported each day, the figures for that particular measure reported for the previous period are revised and the revisions are announced.
It’s quite revealing, because the reporting is focused on the new number, and the revisions slip by without fanfare. But the revisions of the previous period are a better measure.
For the past several months, nearly all the revisions show the numbers to have been worse than first reported. Sometimes dramatically so.
Keep in mind foreclosures are still reaching record levels; one more piece to better understand the dire straights;
http://bizfinance.about.com/od/currentevents/a/Recession.htm
The Decline of the U.S. Housing Market
As the interest rates on these subprime mortgages began to adjust upward, the homeowners couldn’t afford their mortgage payments. Home foreclosures started to rise. As foreclosures started to rise, the mortgage-backed securities lost their value and began to perform poorly for their investors.
In late 2006, foreclosures rose at an alarming rate and the value of mortgage-backed securities fell at an equally alarming rate. By 2008, it was clear that the big banks, those considered “too big to fail” had balance sheets full of mortgage-backed securities that were worthless because homeowners were not paying their mortgage payments and banks had foreclosed on their homes.
The Result: Recession
Because of the dollar amount of mortgage-backed securities held by the banks, suddenly banks had no money to loan. They started posting huge losses.
Consumers and businesses couldn’t borrow money. When consumers and businesses can’t borrow, they can’t spend and companies can’t sell their products and services. The housing market was oversold and new houses didn’t sell. Existing houses up for sell didn’t sell because there were so many of them. Companies that can’t sell products and services experience a drop in their stock price and have to lay off workers. Unemployment rises and consumers spend even less. It becomes a vicious circle and a recession happens.
This is how these “toxic assets,” had a role in bringing down the brought down the market or the U.S. economy.
Didn’t catch that one, but it’s good you have. We’ve got to watch this Democrat Majority at every turn, and then they even pass 2000 page bills no one has read, jeez...
They have that backasswards.
We are going to downgrade their outlook.
So, the Fed is basically saying we are all screwed?
THAT is what I read!
Anyone else who can't read between the lines, you better get ready.
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